The pending SpaceX IPO is generating lots of buzz by introducing the most valuable enterprise ever to go from privately-held to publicly-traded at an expected market cap of $1.75 trillion. Clearly, that gigantic number signals investors’ confidence in the future growth and profitability of AI. But it also sets the bar for what SpaceX must achieve going forward to reward the folks and funds who bought the pre-offering shares in the underwriting, and will rush to load up when the opening bell rings at the Nasdaq at its debut, slated for mid-June.
Trainer’s model uses discounted cash flow projections to pinpoint the results SpaceX must show to justify an expected $1.75 trillion valuation. By Fortune‘s estimates, he’s positing that investors will want a total annual return of around 10% over the next decade to deem SpaceX a decent buy. That number, by the way, is extremely modest given that we’re talking an investment that the pure math judges as the longest of long shots.
By Trainer’s projections, the revenue target that would score by 2035 is the first such number ever followed by a “t,” $1.1 trillion.
That’s a stunner, especially when you consider that over the past four quarters, the highest sales posted by any U.S. company was the $742 billion recorded by Amazon. It’s also instructive to examine the extreme steepness of the growth trajectory required to lift SpaceX’s revenues today of $18.7 billion to $1.1 trillion. Garnering that almost 600x increase means hiking sales 50% a year, on average, for a decade. Here’s the haymaker: In this scenario, SpaceX’s revenues would jump from year-end 2034 to the close of 2035 from $718 billion to $1.1 trillion, maintaining the 50% annual pace needed to ring the bell, for an increase of $360 billion.
